- Record-setting 2019:
- Full year sales of $555 million, up 9%
- GAAP net income of $60.3 million, up 29%
- GAAP EPS of $1.88, up 26%
- Non-GAAP cash EPS of $2.43, up 6%
- Strong 2019 debt reduction of $52 million
- 2019 Adjusted EBITDA of $131.1 million, 23.6% margin on
sales
- Introducing 2020 revenue guidance of $520 million to $555
million, GAAP EPS of $1.55 to $1.88, non-GAAP cash EPS of $2.00 to
$2.30, adjusted EBITDA margin of 22.0% to 23.0%
Helios Technologies, Inc. (Nasdaq: HLIO) (“Helios” or the
“Company”), a global industrial technology leader that develops and
manufactures solutions for both the hydraulics and electronics
markets, today reported financial results for the fourth quarter
and full year ended December 28, 2019.
Wolfgang Dangel, the Company’s President and Chief Executive
Officer, commented, “We are pleased with our strong finish to 2019.
We have been focused on operational efficiency which, in the fourth
quarter, led to higher output per labor hour than expected. This
facilitated better throughput and the realization of solid
Hydraulics segment sales. Additionally, the incremental revenue and
improved productivity drove better-than-expected margins, leading
to strong EPS performance.
“Reflecting on our achievements for the year, we continued to
make tremendous progress toward our Vision 2025 goals. Key
accomplishments during 2019 include the following:
Hydraulics Segment
- Completed our Cartridge Valve Technology (CVT), manufacturing
consolidation project in the first quarter, resulting in additional
capacity while improving productivity as we progressed through the
year.
- Accelerated our ‘in the region, for the region’ initiative by:
- Starting production of CVT components in Italy to serve the
EMEA market. Our next goal with this initiative is to establish
full cartridge valve production capability for EMEA.
- Approving site expansion plans in Italy to serve both Quick
Release Couplings (QRC) and CVT, including full cartridge valve
production capability.
- Opening our new facility in China in the second quarter, ahead
of schedule. Shipments ramped up as we progressed through the year,
in support of growing demand from the China market.
- Progressing with our CVT engineering center of excellence
project in the U.S., with completion expected in the first quarter
of 2020. This state-of-the-art facility will be the foundation for
new, innovative product development.
- Began E-Volved product initiative, our electro-hydraulic quick
release coupling product range.
- Expanded launch of new valves in the FLeX series CVT
electro-hydraulic product line. This portfolio allows us to compete
in new applications, facilitating a critical path to more systems
business.
Electronics Segment
- Expanded our ability to offer our products and solutions to a
broader, global and more diverse customer base.
- Made the final earnout payment to the sellers of Enovation
Controls, representing full payout of the contingent purchase price
and reflecting the strong performance of the business in 2017 and
2018.
- Successful cost management and productivity improvements drove
160 basis point improvement in gross margin.”
Mr. Dangel added, “We also realized very strong cash flow during
the quarter, allowing us to exceed our adjusted free cash flow goal
for the year, coming in at nearly 14% of sales. This, in turn,
contributed to $52 million of debt reduction in 2019, closing the
year with 2.1x net debt-to-adjusted EBITDA as we draw nearer to our
goal of less than 2x.”
Fourth Quarter 2019 Consolidated Results
($ in millions, except per share data)
Q4 2019
Q4 2018
Change
% Change
Net sales
$
125.9
$
138.7
$
(12.8)
(9%)
Gross profit
$
47.4
$
52.9
$
(5.5)
(10%)
Gross margin
37.7%
38.2%
Operating income
$
18.8
$
22.1
$
(3.3)
(15%)
Operating margin
14.9%
15.9%
Non-GAAP adjusted operating margin
18.5%
19.7%
Net income
$
13.8
$
16.4
$
(2.6)
(16%)
Diluted EPS
$
0.43
$
0.51
$
(0.08)
(16%)
Non-GAAP cash net income
$
17.2
$
18.1
$
(0.9)
(5%)
Non-GAAP cash EPS
$
0.54
$
0.56
$
(0.02)
(4%)
Adjusted EBITDA
$
29.2
$
32.4
$
(3.2)
(10%)
Adjusted EBITDA margin
23.2%
23.4%
See the attached tables for additional important disclosures
regarding Helios’s use of non-GAAP adjusted operating income,
non-GAAP adjusted operating margin, non-GAAP cash net income,
non-GAAP cash EPS, adjusted EBITDA (earnings before net interest
expense, income taxes, depreciation and amortization, and certain
non-recurring charges) and adjusted EBITDA margin (adjusted EBITDA
as a percentage of sales) as well as reconciliations of GAAP
operating income to non-GAAP adjusted operating income and GAAP net
income to non-GAAP cash net income and adjusted EBITDA. Helios
believes that, when used in conjunction with measures prepared in
accordance with GAAP, the non-GAAP measures described above help
improve the understanding of its operating performance.
Sales
- $11.1 million decline, 8%, excluding the effect of
currency
- Foreign currency translation on sales – $1.7 million
unfavorable
Profits and margins
- Gross profit and margin drivers – Improved productivity, cost
management efforts, offset by reduced leverage of fixed costs on
lower sales and a change in the margin profile of products sold;
last year included favorable $0.8 million for acquisition inventory
step-up amortization
- Selling, engineering and administrative (“SEA”) expenses –
Decreased primarily due to cost reduction efforts
- Amortization of intangible assets – $4.5 million ($6.0 million
in prior year, included short-lived acquisition intangibles)
Non-operating items
- Net interest expense – $3.2 million ($4.6 million in prior
year), decreased due to lower debt and interest rates
- Effective tax rate – 18.1%, last year’s rate was not meaningful
due to the U.S. Tax Cuts and Jobs Act as well as some discrete
items
Net income, EPS, non-GAAP cash EPS and
adjusted EBITDA
- GAAP net income and EPS – Variance due to last year’s tax
reform benefit
- Non-GAAP cash EPS – Comparable to last year, reflects the
above, adjusted for amortization and unusual items
- Adjusted EBITDA margin – Decline of only 20 basis points on
lower sales volume, reflects solid profitability in a softening
demand environment
Full Year 2019 Consolidated Results
($ in millions, except per share
data)
2019
2018
Change
% Change
Net sales
$
554.7
$
508.0
$
46.7
9%
Gross profit
$
212.3
$
192.7
$
19.6
10%
Gross margin
38.3%
37.9%
Operating income
$
90.1
$
75.6
$
14.5
19%
Operating margin
16.2%
14.9%
Non-GAAP adjusted operating margin
20.3%
21.4%
Net income
$
60.3
$
46.7
$
13.6
29%
Diluted EPS
$
1.88
$
1.49
$
0.39
26%
Non-GAAP cash net income
$
77.7
$
72.1
$
5.6
8%
Non-GAAP cash EPS
$
2.43
$
2.30
$
0.13
6%
Adjusted EBITDA
$
131.1
$
124.3
$
6.8
5%
Adjusted EBITDA margin
23.6%
24.5%
See the attached tables for additional important disclosures
regarding Helios’s use of non-GAAP adjusted operating income,
non-GAAP adjusted operating margin, non-GAAP cash net income,
non-GAAP cash EPS, adjusted EBITDA and adjusted EBITDA margin as
well as reconciliations of GAAP operating income to non-GAAP
adjusted operating income and GAAP net income to non-GAAP cash net
income and adjusted EBITDA. Helios believes that, when used in
conjunction with measures prepared in accordance with GAAP,
non-GAAP measures described above help in the understanding of its
operating performance.
Sales
- Acquisition related – $65.5 million
- Organic – $10.7 million decline, 2.1%, excluding the effect of
currency
- Foreign currency translation on organic sales – $8.1 million
unfavorable
Profits and margins
- Gross profit and margin drivers – Acquisitions, production
efficiencies, price increases and cost management efforts,
partially offset by lower organic sales volume, higher material
costs, and unfavorable product mix and foreign currency; last year
included $4.4 million of acquisition inventory step-up
amortization
- SEA expenses – Increased primarily due to Faster and CFP
acquisitions as well as investments to support the growth and
change in Helios business structure, partially offset by cost
management efforts; improved as a percent of sales
- Unusual items – $1.7 million organizational restructuring
charges and $2.7 million loss on disposal of intangible asset
unfavorably impacted current year operating income
- Amortization of intangible assets – $18.1 million ($23.3
million in prior year)
- Other operating profit and margin factors – Last year included
$5.7 million for acquisition and financing-related expenses
Non-operating items
- Net interest expense – Higher for debt to fund the Faster and
CFP acquisitions, partially offset by debt repayments during the
year
- Foreign currency transaction (gain) loss – $0.8 million gain in
current year; $3.6 million loss in prior year, including loss on
foreign exchange forward contract to secure funds for Faster
acquisition
- Effective tax rate – 20.0%, up from 17.1% last year
Net income, EPS, non-GAAP cash EPS and
adjusted EBITDA
- GAAP net income and EPS – Improvement primarily driven by
acquisition growth and cost management efforts, partially offset by
reduced organic sales volume, an unfavorable product mix and
investments to support the structural growth of the Company; last
year included acquisition-related expenses
- Non-GAAP cash EPS – Improvement primarily driven by acquisition
growth
- Adjusted EBITDA margin – Primarily impacted by lower organic
sales volume, an unfavorable product mix and investments to support
the structural growth of the Company
Hydraulics Segment Review
(Refer to sales by geographic region and segment data in
accompanying tables)
Fourth quarter segment sales of $102.6 million decreased 8%
compared with the prior-year quarter. The $9.0 million decrease
included $1.7 million from unfavorable changes in foreign currency
exchange rates. Sales declined in the Americas region by 18%,
impacted by seasonality and softer end market demand. The Europe,
Middle East, Africa (“EMEA”) region declined 8% and Asia/Pacific
(“APAC”) region sales grew 11%, both excluding the $1.7 million
effect of unfavorable foreign currency exchange rate changes.
Fourth quarter 2019 gross margin of 36.3% expanded compared with
the prior year’s 35.6% as improvements in productivity and price
increases, net of material cost increases, offset unfavorable
product mix, increased material costs and foreign currency.
SEA expenses in the 2019 fourth quarter decreased $0.5 million
compared with the prior-year period, benefiting from cost
management efforts.
Primarily due to lower sales, fourth quarter operating income
decreased $2.0 million to $20.3 million, representing 19.8% of
sales, compared with 20.0% last year.
For the full year 2019, segment sales grew $61.0 million, or
16%, to $442.8 million, compared with 2018. The growth included
$65.5 million of acquisition revenue contributed by Faster and CFP,
and 1% organic growth excluding the $7.6 million impact of
unfavorable changes in foreign currency exchange rates. Operating
income for the year was $86.0 million, or 19.4% of sales.
Electronics Segment Review
(Refer to sales by geographic region and segment data in
accompanying tables)
Segment sales were $23.4 million for the 2019 fourth quarter, a
14% decrease compared with the fourth quarter of last year. The
decline was primarily due to softer demand in the recreational and
oil and gas end markets, as well as the impact of changes in
certain contractual obligations. Foreign currency translation had a
$0.1 million unfavorable impact on segment sales in the
quarter.
Fourth quarter 2019 gross margin was 43.5%, down from 45.7% last
year. This decline was due to lower revenue, partially offset by
cost management efforts which resulted in production
efficiencies.
SEA costs decreased by $0.2 million in the quarter compared with
last year due to cost management efforts.
Operating income was $3.0 million in the fourth quarter of 2019,
compared with $5.1 million in 2018, with the 2019 operating margin
declining to 12.9% from 18.7% last year.
Full-year segment sales were down 11% to $111.9 million,
compared with 2018. Foreign currency had a $0.6 million unfavorable
impact. Despite a stronger gross margin, the sales decline resulted
in lower operating income of $22.0 million, compared with $25.0
million last year. Benefiting from cost management efforts, the
2019 full-year operating margin of 19.7% was relatively comparable
to last year’s 19.8%.
Balance Sheet and Cash Flow Review
Total debt was $300.4 million at December 28, 2019, down from
$318.3 million at September 28, 2019 and $352.7 million at the end
of 2018. Cash and cash equivalents at December 28, 2019 were $22.1
million, compared with $13.7 million at September 28, 2019 and
$23.5 million at December 29, 2018. The net debt-to- adjusted
EBITDA ratio improved to 2.1x at December 28, 2019, compared with
2.4x at the end of last year.
Cash provided by operations was $90.5 million and $77.5 million
in 2019 and 2018, respectively. Full-year 2019 operating cash flow
reached $101.2 million after considering the second quarter
contingent consideration payment. The improvement was mainly due to
improved cash from earnings and working capital management.
Capital expenditures were $25.0 million and $28.4 million for
2019 and 2018, respectively. Capital expenditures in 2020 are
estimated to be $20 million to $25 million, in support of the
Company’s ongoing investments to drive its innovative
leadership.
2020 Outlook and Guidance
The following summarizes the Company’s expectations for 2020,
compared with actual 2019 results:
2019 Actual
Preliminary 2020
Guidance
Change
Consolidated revenue
$555 million
$520 - $555 million
0 - (6)%
Hydraulics segment revenue
$443 million
$415 - $443 million
0 - (6)%
Electronics segment revenue
$112 million
$105 - $112 million
0 - (6)%
GAAP EPS
$1.88
$1.55 - $1.88
0 - (17)%
Non-GAAP cash EPS
$2.43
$2.00 - $2.30
(5)% - (18)%
Adjusted EBITDA margin
23.6%
22.0% - 23.0%
(60) - (160) bps
Mr. Dangel noted, “Given the economic backdrop, including
uncertainty surrounding the economic impact of the coronavirus, we
are approaching 2020 guidance cautiously, with wider ranges than we
have historically provided. While our current end markets continue
to be challenging globally, with limited pockets of growth, the
economic indicators that we track signal optimism that growth will
resume in other markets in the second half of the year.
“We believe some additional color around sequential progression
and seasonality would be helpful in understanding our expectations
for 2020 revenue,” Dangel added. “We currently anticipate that our
Hydraulics segment revenue will be evenly split between the first
and second halves of the year, with the second quarter representing
the strongest for the segment. The progression tips slightly toward
the back half of the year for the Electronics segment with a
48%/52% ratio, and the third quarter driving the second half
strength. The variations are due primarily to current global
economic conditions, but are also impacted by known and potential
delays in shipments to and from China in the early part of the year
resulting from slowed business activity in the region after the
discovery of the coronavirus.”
Continuing, Dangel stated, “While we experienced meaningful
improvements in gross margin in the Electronics segment in 2019,
2020 requires significant investment for R&D and engineering
resources to support the strong demand for projects with production
starting in mid-to-late 2021 and continuing through 2023. The
product development process for these opportunities is a joint
effort between us and our OEM customers that takes place 12-24
months before we start selling the products. While the timing of
expenses related to these customer projects occurs well ahead of
the associated revenue, we are confident that these efforts will
result in future sales and significant profitable growth in this
segment.”
He concluded, “From a strategic perspective, we continue to work
toward our Vision 2025 goals, including attainment of synergies
from our past acquisitions. Continuous improvement and innovation
are embedded in our culture, driving development of new products
and solutions as well as broadening our market coverage. Based on
our current market position and outlook, we anticipate a CAGR rate
of 8% from 2019-2025 for the Hydraulics segment, with 2025 revenue
of approximately $700 million. This will result in market share
gains relative to expected hydraulics market growth of 3%. Given
the projects we have in our pipeline at this time, we believe we
can increase our Vision 2025 sales target for the Electronics
segment to approximately $220 million, representing a 12% CAGR from
2019 through 2025. We have a high degree of confidence that we
remain on the path to achieve global technology leadership in the
industrial goods sector by 2025, to be evidenced by realizing $1
billion in sales while maintaining superior profitability and
financial strength.”
Webcast
The Company will host a conference call and webcast tomorrow
morning at 9:00 a.m. Eastern Time to review its financial and
operating results and discuss its corporate strategies and outlook.
A question-and-answer session will follow.
The conference call can be accessed by calling (201) 689-8573.
The audio webcast can be monitored at www.heliostechnologies.com.
Participants will have the ability to ask questions on either the
teleconference call or the webcast.
A telephonic replay will be available from 12:00 p.m. ET on the
day of the call through Tuesday, March 3, 2020. To listen to the
archived call, dial (412) 317-6671 and enter conference ID number
13697528. The webcast replay will be available in the investor
relations section of the Company’s website at
www.heliostechnologies.com, where a transcript will also be posted
once available.
About Helios Technologies
Helios Technologies is a global industrial technology leader
that develops and manufactures hydraulic and electronic control
solutions for diverse markets. The Company operates in two business
segments, Hydraulics and Electronics. The Hydraulics segment
markets and sells products globally under the brands of Sun
Hydraulics in relation to cartridge valve technology, Custom
Fluidpower with regard to hydraulic system design and Faster in
connection with quick release coupling solutions. Global
Electronics brands include Enovation Controls and Murphy for
fully-tailored solutions with a broad range of rugged and reliable
instruments such as displays, controls and instrumentation
products. Helios Technologies and information about its associated
companies is available online at www.heliostechnologies.com.
FORWARD-LOOKING INFORMATION
This news release contains “forward-looking statements” within
the meaning of Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements involve risks and uncertainties, and
actual results may differ materially from those expressed or
implied by such statements. They include statements regarding
current expectations, estimates, forecasts, projections, our
beliefs, and assumptions made by Helios Technologies, Inc.
(“Helios” or the “Company”), its directors or its officers about
the Company and the industry in which it operates, and assumptions
made by management, and include among other items, (i) the
Company’s strategies regarding growth, including its intention to
develop new products and make acquisitions; (ii) the Company’s
financing plans; (iii) trends affecting the Company’s financial
condition or results of operations; (iv) the Company’s ability to
continue to control costs and to meet its liquidity and other
financing needs; (v) the declaration and payment of dividends; and
(vi) the Company’s ability to respond to changes in customer demand
domestically and internationally, including as a result of
standardization. In addition, we may make other written or oral
statements, which constitute forward-looking statements, from time
to time. Words such as “may,” “expects,” “projects,” “anticipates,”
“intends,” “plans,” “believes,” “seeks,” “estimates,” variations of
such words, and similar expressions are intended to identify such
forward-looking statements. Similarly, statements that describe our
future plans, objectives or goals also are forward-looking
statements. These statements are not guaranteeing future
performance and are subject to a number of risks and uncertainties.
Our actual results may differ materially from what is expressed or
forecasted in such forward-looking statements, and undue reliance
should not be placed on such statements. All forward-looking
statements are made as of the date hereof, and we undertake no
obligation to update any forward-looking statements, whether as a
result of new information, future events or otherwise.
Factors that could cause the actual results to differ materially
from what is expressed or forecasted in such forward-looking
statements include, but are not limited to, (i) conditions in the
capital markets, including the interest rate environment and the
availability of capital; (ii) changes in the competitive
marketplace that could affect the Company’s revenue and/or cost
bases, such as increased competition, lack of qualified
engineering, marketing, management or other personnel, and
increased labor and raw materials costs; and (iii) new product
introductions, product sales mix and the geographic mix of sales
nationally and internationally. Further information relating to
factors that could cause actual results to differ from those
anticipated is included but not limited to information under the
heading Item 1. “Business” and Item 1A. “Risk Factors” in the
Company’s Form 10-K for the year ended December 28, 2019.
Helios has presented forward-looking statements regarding
non-GAAP cash EPS and Adjusted EBITDA margin. These non-GAAP
financial measures are derived by excluding certain amounts,
expenses or income from the corresponding financial measures
determined in accordance with GAAP. The determination of the
amounts that are excluded from these non-GAAP measures is a matter
of management judgment and depends upon, among other factors, the
nature of the underlying expense or income recognized in a given
period. Helios is unable to present a quantitative reconciliation
of forward-looking non-GAAP cash EPS and Adjusted EBITDA margin to
their most directly comparable forward-looking GAAP financial
measures because such information is not available, and management
cannot reliably predict all the necessary components of such GAAP
measures without unreasonable effort or expense. In addition, the
Company believes that such reconciliations would imply a degree of
precision that would be confusing or misleading to investors. The
unavailable information could have a significant impact on Helios’s
full year 2020 financial results. These non-GAAP financial measures
are preliminary estimates and are subject to risks and
uncertainties, including, among others, changes in connection with
quarter-end and year-end adjustments. Any variation between
Helios’s actual results and preliminary financial data set forth
above may be material.
This news release will discuss some historical non-GAAP
financial measures, which the Company believes are useful in
evaluating its performance. You should not consider the inclusion
of this additional information in isolation or as a substitute for
results prepared in accordance with GAAP.
Financial Tables Follow.
HELIOS TECHNOLOGIES
CONSOLIDATED STATEMENTS OF
INCOME
(In thousands, except per
share data)
Three Months Ended For the Year Ended
December 28, December 29, December 28,
December 29,
2019
2018
% Change
2019
2018
% Change (Unaudited) (Unaudited)
Net sales
$
125,927
$
138,723
(9
)%
$
554,665
$
508,045
9
%
Cost of sales
78,500
85,795
(9
)%
342,383
315,362
9
%
Gross profit
47,427
52,928
(10
)%
212,282
192,683
10
%
Gross margin
37.7
%
38.2
%
38.3
%
37.9
%
Selling, engineering and administrative expenses
24,134
24,789
(3
)%
99,665
93,867
6
%
Restructuring charges
-
-
NM
1,724
-
NM
Amortization of intangible assets
4,521
6,088
(26
)%
18,065
23,262
(22
)%
Loss on disposal of intangible asset
-
-
NM
2,713
-
NM
Operating income
18,772
22,051
(15
)%
90,115
75,554
19
%
Operating margin
14.9
%
15.9
%
16.2
%
14.9
%
Interest expense, net
3,164
4,620
(32
)%
15,387
13,876
11
%
Foreign currency transaction (gain) loss, net
(938
)
(212
)
342
%
(846
)
3,558
(124
)%
Miscellaneous (income) expense, net
(264
)
58
(555
)%
(385
)
243
(258
)%
Change in fair value of contingent consideration
(51
)
554
(109
)%
652
1,482
(56
)%
Income before income taxes
16,861
17,031
(1
)%
75,307
56,395
34
%
Income tax provision
3,052
607
403
%
15,039
9,665
56
%
Net income
$
13,809
$
16,424
(16
)%
$
60,268
$
46,730
29
%
Basic and diluted net income per common share
$
0.43
$
0.51
(16
)%
$
1.88
$
1.49
26
%
Basic and diluted weighted average shares outstanding
32,044
31,965
32,015
31,309
Dividends declared per share
$
0.09
$
0.09
$
0.36
$
0.36
NM = Not meaningful
HELIOS TECHNOLOGIES
CONSOLIDATED BALANCE
SHEETS
(In thousands, except share
data)
December 28, December 29,
2019
2018
Assets Current assets: Cash and cash equivalents
$
22,123
$
23,477
Restricted cash
39
38
Accounts receivable, net of allowance for doubtful accounts of
$1,131 and $1,336
66,677
72,806
Inventories, net
85,195
85,989
Income taxes receivable
3,196
4,549
Other current assets
15,359
9,997
Total current assets
192,589
196,856
Property, plant and equipment, net
145,854
126,868
Deferred income taxes
5,803
9,463
Goodwill
377,569
383,131
Other intangible assets, net
294,651
320,548
Other assets
5,285
5,299
Total assets
$
1,021,751
$
1,042,165
Liabilities and shareholders’ equity Current liabilities:
Accounts payable
$
29,730
$
40,879
Accrued compensation and benefits
16,898
13,260
Other accrued expenses and current liabilities
13,549
9,941
Current portion of contingent consideration
828
18,120
Current portion of long-term non-revolving debt, net
7,623
5,215
Dividends payable
2,884
2,878
Income taxes payable
4,941
2,697
Total current liabilities
76,453
92,990
Revolving line of credit
208,708
255,750
Long-term non-revolving debt, net
84,062
91,720
Contingent consideration, less current portion
-
840
Deferred income taxes
49,290
57,783
Other noncurrent liabilities
25,602
12,314
Total liabilities
444,115
511,397
Commitments and contingencies
-
-
Shareholders’ equity: Preferred stock, par value $0.001,
2,000,000 shares authorized, no shares issued or outstanding
-
-
Common stock, par value $0.001, 100,000,000 and 50,000,000 shares
authorized, 32,046,597 and 31,964,775 shares issued and outstanding
32
32
Capital in excess of par value
365,310
357,933
Retained earnings
267,658
219,056
Accumulated other comprehensive loss
(55,364
)
(46,253
)
Total shareholders’ equity
577,636
530,768
Total liabilities and shareholders’ equity
$
1,021,751
$
1,042,165
HELIOS TECHNOLOGIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
For the Year Ended December 28, December
29,
2019
2018
Cash flows from operating activities: Net income
$
60,268
$
46,730
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
35,215
39,714
Loss on disposal of assets
2,843
56
Stock-based compensation expense
5,207
4,271
Amortization of debt issuance costs
717
729
Benefit for deferred income taxes
(551
)
(1,455
)
Amortization of acquisition related inventory step up
-
4,441
Change in fair value of contingent consideration
615
1,482
Forward contract (gains) losses, net
(2,863
)
3,496
Other, net
1,156
(86
)
(Increase) decrease in operating assets: Accounts receivable
5,657
(5,976
)
Inventories
(1,450
)
(11,703
)
Income taxes receivable
(2,459
)
(4,054
)
Other current assets
(4,043
)
565
Other assets
1,772
(1,299
)
Increase (decrease) in operating liabilities: Accounts payable
(10,750
)
5,894
Accrued expenses and other liabilities
5,700
(1,400
)
Income taxes payable
6,234
(5,031
)
Other noncurrent liabilities
(2,057
)
1,076
Contingent consideration payments in excess of acquisition date
fair value
(10,731
)
-
Net cash provided by operating activities
90,480
77,450
Cash flows from investing activities: Acquisitions of
businesses, net of cash acquired
-
(534,662
)
Capital expenditures
(25,025
)
(28,380
)
Proceeds from dispositions of equipment
196
62
Cash settlement of forward contract
2,478
(2,535
)
Net cash used in investing activities
(22,351
)
(565,515
)
Cash flows from financing activities: Borrowings on
revolving credit facility
129,951
282,500
Repayment of borrowings on revolving credit facility
(176,750
)
(142,750
)
Borrowings on long-term non-revolving debt
-
101,447
Repayment of borrowings on long-term non-revolving debt
(5,465
)
(3,825
)
Borrowings under factoring arrangements
-
3,184
Repayment of borrowings under factoring arrangements
-
(3,120
)
Proceeds from stock issued
1,650
241,338
Dividends to shareholders
(11,525
)
(11,003
)
Debt issuance costs
-
(1,763
)
Payment of contingent consideration liability
(8,016
)
(17,342
)
Other financing activities
(1,588
)
(1,326
)
Net cash (used in) provided by financing activities
(71,743
)
447,340
Effect of exchange rate changes on cash, cash equivalents and
restricted cash
2,261
318
Net decrease in cash, cash equivalents and restricted cash
(1,353
)
(40,407
)
Cash, cash equivalents and restricted cash, beginning of period
23,515
63,922
Cash, cash equivalents and restricted cash, end of period
$
22,162
$
23,515
HELIOS TECHNOLOGIES
SEGMENT DATA
(In thousands)
Three Months Ended For the Year Ended
December 28, December 29, December 28,
December 29,
2019
2018
2019
2018
(Unaudited) (Unaudited) (Unaudited) (Unaudited) Sales: Hydraulics
$
102,550
$
111,548
$
442,812
$
381,845
Electronics
23,377
27,175
111,853
126,200
Consolidated
$
125,927
$
138,723
$
554,665
$
508,045
Gross profit and margin: Hydraulics
$
37,248
$
39,738
$
161,401
$
141,674
36.3%
35.6%
36.4%
37.1%
Electronics
10,179
12,414
50,881
55,450
43.5%
45.7%
45.5%
43.9%
Corporate and other
-
776
-
(4,441)
Consolidated
$
47,427
$
52,928
$
212,282
$
192,683
37.7%
38.2%
38.3%
37.9%
Operating income and margin: Hydraulics
$
20,275
$
22,291
$
86,027
$
83,858
19.8%
20.0%
19.4%
22.0%
Electronics
3,016
5,086
21,994
25,046
12.9%
18.7%
19.7%
19.8%
Corporate and other
(4,519)
(5,326)
(17,906)
(33,350)
Consolidated
$
18,772
$
22,051
$
90,115
$
75,554
14.9%
15.9%
16.2%
14.9%
HELIOS TECHNOLOGIES
ADDITIONAL INFORMATION
(Unaudited)
2019 Sales by Geographic Region and Segment ($ in millions)
Q1
% of Total
Q2
% of Total
Q3
% of Total
Q4
% of Total
2019
% of Total
Americas:
Hydraulics
$ 41.6
$ 41.2
$ 43.3
$ 36.2
$ 162.3
Electronics
26.1
26.6
24.0
19.5
$ 96.3
Consol. Americas
67.7
46%
67.8
47%
67.3
49%
55.7
44%
258.6
47.0%
EMEA:
Hydraulics
41.8
36.8
31.9
31.1
141.6
Electronics
2.5
1.8
2.1
2.0
8.4
Consol. EMEA
44.3
30%
38.6
27%
34.0
25%
33.1
26%
150.0
27.0%
APAC:
Hydraulics
33.1
35.7
34.9
35.2
138.9
Electronics
1.8
1.7
1.8
1.9
7.2
Consol. APAC
34.9
24%
37.4
26%
36.7
26%
37.1
30%
146.1
26.0%
Total
$ 146.9
$ 143.8
$ 138.0
$ 125.9
$ 554.7
2018 Sales by Geographic Region and Segment ($
in millions)
Q1
%of Total
Q2
% of Total
Q3
% of Total
Q4
% of Total
2018
% of Total
Americas: Hydraulics
$ 26.4
$ 39.7
$ 38.4
$ 44.2
$ 148.7
Electronics
30.1
27.9
27.4
23.5
108.9
Consol. Americas
56.5
58%
67.6
50%
65.8
48%
67.7
49%
257.6
51%
EMEA: Hydraulics
19.6
40.5
34.6
34.9
129.6
Electronics
2.7
2.7
2.7
2.0
10.1
Consol. EMEA
22.3
23%
43.2
32%
37.3
28%
36.9
27%
139.7
27%
APAC: Hydraulics
16.6
23.4
31.1
32.4
103.5
Electronics
1.9
2.0
1.6
1.7
7.2
Consol. APAC
18.5
19%
25.4
18%
32.7
24%
34.1
24%
110.7
22%
Total
$ 97.3
$ 136.2
$ 135.8
$ 138.7
$ 508.0
HELIOS TECHNOLOGIES
Non-GAAP Adjusted Operating
Income RECONCILIATION
(In thousands)
(Unaudited)
Three Months Ended For the Year Ended
December 28, December 29, December 28,
December 29,
2019
2018
2019
2018
GAAP operating income
$
18,772
$
22,051
$
90,115
$
75,554
Acquisition-related amortization of intangible assets
4,521
6,028
17,924
23,021
Acquisition-related amortization of inventory step-up
-
(776
)
-
4,441
Acquisition and financing-related expenses
-
90
11
5,685
Restructuring charges
-
-
1,724
170
Loss on disposal of intangible asset
-
-
2,713
-
Other
-
-
127
-
Non-GAAP adjusted operating income
$
23,293
$
27,393
$
112,614
$
108,871
GAAP operating margin
14.9
%
15.9
%
16.2
%
14.9
%
Non-GAAP Adjusted operating margin
18.5
%
19.7
%
20.3
%
21.4
%
Non-GAAP Cash Net Income
RECONCILIATION
(In thousands)
(Unaudited)
Three Months Ended For the Year Ended
December 28, December 29, December 28,
December 29,
2019
2018
2019
2018
Net income
$
13,809
$
16,424
$
60,268
$
46,730
Acquisition-related amortization of inventory step-up
-
(776
)
-
4,441
Acquisition and financing-related expenses
-
90
11
5,685
Restructuring charges
-
-
1,724
170
Loss on disposal of intangible asset
-
-
2,713
-
Foreign currency forward contract loss
-
-
-
2,535
Change in fair value of contingent consideration
(51
)
554
652
1,482
Amortization of intangible assets
4,521
6,088
18,065
23,262
Impact of tax reform
-
(1,400
)
-
(1,400
)
Other one-time tax related items
-
(1,920
)
-
(1,920
)
Other
-
-
127
-
Tax effect of above
(1,118
)
(1,003
)
(5,823
)
(8,850
)
Non-GAAP cash net income
$
17,162
$
18,057
$
77,737
$
72,135
Non-GAAP cash net income per diluted share
$
0.54
$
0.56
$
2.43
$
2.30
Adjusted EBITDA
RECONCILIATION
(In thousands)
(Unaudited)
Three Months Ended For the Year Ended
December 28, December 29, December 28,
December 29,
2019
2018
2019
2018
Net income
$
13,809
$
16,424
$
60,268
$
46,730
Interest expense, net
3,164
4,620
15,387
13,876
Income tax provision
3,052
607
15,039
9,665
Depreciation and amortization
9,209
10,913
35,215
39,714
EBITDA
29,234
32,564
125,909
109,985
Acquisition-related amortization of inventory step-up
-
(776
)
-
4,441
Acquisition and financing-related expenses
-
90
11
5,685
Restructuring charges
-
-
1,724
170
Foreign currency forward contract loss
-
-
-
2,535
Change in fair value of contingent consideration
(51
)
554
652
1,482
Loss on disposal of intangible asset
-
-
2,713
-
Other
-
-
127
-
Adjusted EBITDA
$
29,183
$
32,432
$
131,136
$
124,298
Adjusted EBITDA margin
23.2
%
23.4
%
23.6
%
24.5
%
Adjusted Net Cash Provided by
Operating Activities and Free Cash Flow RECONCILIATION
(In thousands)
(Unaudited)
For the Year Ended December 28, December
29,
2019
2018
Net cash provided by operating activities
$
90,480
$
77,450
Contingent consideration payment in excess of acquisition date fair
value
10,731
-
Adjusted net cash provided by operating activities
101,211
77,450
Capital expenditures
(25,025
)
(28,380
)
Adjusted free cash flow
$
76,186
$
49,070
Adjusted free cash flow as a percent of sales
14
%
10
%
Non-GAAP Financial Measures:
Adjusted operating income, adjusted operating margin, EBITDA,
adjusted EBITDA, adjusted EBITDA margin, adjusted free cash flow,
net debt-to-EBITDA, cash net income and cash net income per diluted
share are not measures determined in accordance with generally
accepted accounting principles in the United States, commonly known
as GAAP. Nevertheless, Helios believes that providing non-GAAP
information such as adjusted operating income, adjusted operating
margin, EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted
free cash flow, net debt-to-EBITDA, cash net income and cash net
income per diluted share are important for investors and other
readers of Helios’s financial statements, as they are used as
analytical indicators by Helios’s management to better understand
operating performance. Because adjusted operating income, adjusted
operating margin, adjusted EBITDA, adjusted EBITDA margin, cash net
income and cash net income per diluted share are non-GAAP measures
and are thus susceptible to varying calculations, adjusted
operating income, adjusted operating margin, EBITDA, adjusted
EBITDA, adjusted EBITDA margin, adjusted free cash flow, net
debt-to-EBITDA, cash net income and cash net income per diluted
share, as presented, may not be directly comparable to other
similarly titled measures used by other companies.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200224005786/en/
Karen L. Howard / Deborah K. Pawlowski Kei Advisors LLC (716)
843-3942 / (716) 843-3908 khoward@keiadvisors.com /
dpawlowski@keiadvisors.com
Helios Technologies (NASDAQ:HLIO)
Historical Stock Chart
From Jun 2024 to Jul 2024
Helios Technologies (NASDAQ:HLIO)
Historical Stock Chart
From Jul 2023 to Jul 2024